Selecting the right Travel Management Company (TMC) for your organization has never been more important than it is today. TMC’s are uniquely positioned to bring the right technologies and people together to service travelers and help realize cost savings opportunities through both preferred vendor agreements and consortia programs.
Even more, TMC’s help better align broader corporate goals such as sustainability, corporate risk management, payment solutions, and expense automation. In order for a company to evaluate which TMC is the right fit, it is important to first understand how the role of the TMC has changed over the years and how these changes have an impact on a clients’ business travel program. With this understanding, a client can better navigate its due diligence approach when selecting the right TMC partner.
As Technology Evolves, So Does the RFP
As online booking technologies and mid-office and back office automation grew in popularity, this was the catalyst that spurred investments across the entire corporate travel ecosystem. In the early 2000’s, TMC’s were gaining efficiencies through both home-grown and custom built technology processes but remained largely a “people” business. Request for Proposals (RFP’s) to TMC’s would focus heavily on the service aspect that the TMC could provide and any process or technology offering that could support its operations. TMC RFP’s were largely voluminous documents with fill-in-the-blank pricing spreadsheets and questionnaires that featured yes/no answers for a range of services.
Ten years later, the seeds planted by industry investment started to take root. If we consider corporate travel in the same way we think of a supply chain process – front end booking support to ticketing, fulfillment, reporting, and expense reimbursement, it is easy to see why technology companies focused on optimizing discrete functions made sense. Over time, third party technologies filled the TMC landscape and over the years have had a significant impact on the industry and how a TMC functions. Likewise, a successful TMC RFP process has changed as well.
The TMC RFP Process
As third-party technology companies gained industry traction, it became clear, at least in most cases, TMC’s were better off as technology integrators as opposed to inventors. By and large, TMC’s whose focus shifted from technology development to technology aggregation could put a renewed focus on strong customer service and win the day.
With an eye toward agent efficiencies and streamlining both transactional and non-transactional activities, many TMC’s were able to shift focus from building competing technology to applying third party technologies in a way that added value to their specific client need. This idea remains important today and has become one of the hallmarks of our process in terms of helping clients determine the right fit for their organization.
Even today we see and hear stories where TMC’s are adept and highly successful at pushing the limits of third party technologies, becoming key advisors to these companies as it relates to new product upgrades or enhancements, and some have even taken equity positions in technology companies to garner even more influence over product development.
Savvy clients understand how these types of changes to the industry have a direct impact on their travel programs and TMC’s know when a client lacks this understanding. This is important for several reasons. Even before the pandemic, answering a RFP can be a significant undertaking for a TMC. Bid writers tend to be understaffed even in good times (pre-pandemic) and must coordinate responses and feedback from a variety of internal functional areas including their global counterparts for questions dealing with in-country operations and finance personnel for price modeling.
All of these resources are stressed as well with other job requirements. When TMC’s see RFP’s written to standards from the 1990’s or early 2000’s, the seriousness of the inquiry can come into play and negatively impact the process. We’ve seen examples where TMC’s either elect to not bid on the RFP or may provide only sub-standard answers to what is viewed as a sub-standard RFP. TMCs know when an RFP is a pricing exercise or when an organization is really considering making a change. More recently, as TMC’s have either gone out of business as a result of the pandemic or have found themselves even more resource constrained, there has been both an influx of RFP’s as a result of unhappy clients and even more resource strain due to general staffing shortages.
If your company is considering a managed program under a TMC model for the first time or if you are considering exploring some of the new service offerings available in the market today, some of this background may be useful. The bottom line is that if you’re going to embark on a TMC RFP make sure you know what you are doing!
Best Practices for the TMC RFP Process
- Corporate travel is a unique spend category. If you think traditional procurement rules apply, seek subject matter expertise to help. Your travel program’s spend volume is not necessarily a good indicator of how much a TMC will cost, nor a good barometer for the type of service you need, nor the attention you may receive from a TMC. Similarly, just because you have a “big” travel spend, doesn’t mean a TMC will be willing to bid or offer tremendous savings to your organization.
- When authoring a TMC RFP don’t only think in terms of what the TMC “has” but what it can “do” with what it has. In other words, checking the box that two comparable TMC’s utilize the same third party technology for a particular function is not sufficient. Experience matters. How the TMC utilizes, leverages, and interacts with the third party can be the difference between success and failure
- Interview your stakeholders before authoring or sending the RFP. Understand business requirements and particularly those that may be unique and need to be specifically addressed. This means really dive into cross sections of your organization. Talk to Global Mobility, Corporate Security, Finance, HR/Recruiters, etc. and find out what their needs are.
- Avoid RFP questions that can’t answer the “So what?” challenge. Every question should cause an answer that could be a differentiator. Shorter is better.
- Be impressed with TMC proprietary technology for sure but perform due diligence. How does the TMC’s technology compare to similar third party technology? How is it supported? How widely adopted is the technology? Beware of shiny objects. On the other hand, proprietary technology is a sign of creative thinking and thought leadership – a distinguishing characteristic that may mirror your company’s corporate culture
- TMC’s are not a commodity. You get what you pay for. But understand what you are paying for.
- Get a clear understanding of the service you will be receiving. How will the service be measured? What are the expectations of the client for this service and what do you, as the client, need to commit to ensure the relationship is successful?
- Understand a TMC’s current capabilities and their vision for the future. Does it “fit” with your organization?
Lastly, consider our mantra as you embark on the process: “Do it right. Not fast.” A TMC relationship is long and far reaching. It will pay dividends if the RFP is done correctly but will cause the loudest possible noise if botched.
KesselRun Corporate Travel Solutions is a management consulting firm that specializes in developing, managing, and optimizing corporate travel programs. The company was formed by professionals from the travel industry, as well as traditional supply chain consultants, as a result of growing demand among organizations to put better cost control and optimization metrics around their corporate travel programs. See how Kesselrun can help your corporate travel program here.